US patent court says an abstract idea is not patentable simply because it is tied to a computer system

In CLS Bank v. Alice Corporation, 11-1301, the U.S. Court of Appeals for the Federal Circuit (Washington) ruled on May 10, 2013, that patents held by an Australian electronic financial firm (Alice Corporation) are not valid because the claims are too abstract to qualify for such intellectual property protection. Alice had argued the patents were valid because the claims were tied to a computer system.

Those in the software industry and valuators with software company clients hoping for clarity on the patentability of software in general have to wait. Though there was consensus in the ruling, the ten-judge panel was divided in their reasoning. Half of them sided with the majority opinion, while the other five agreed in part, but dissented in part as well.  Chief Judge Rader said the opinions were so split that “nothing said today beyond our judgment has the weight of precedent.”

One judge, Judge Kimberly Moore, thought the slippery slope of software patentability had been entered, fearing a “freefall” in the nation’s patent system.

“Let’s be clear: if all of these claims, including the system claims, are not patent-eligible, this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents.”